Lesson 7 of 50 for advisers · Expense ratio slabs · 4 min read · Reviewed 13 Nov 2026
Under SEBI’s Mutual Funds Regulations, 2026, an active open-ended equity fund’s base expense ratio is capped at 2.10% on its first ₹500 crore, falling in slabs to 0.95% on very large funds. Other active funds start at 1.85%, and index funds and ETFs are capped at 0.90%. Brokerage and taxes such as GST come on top.
From 1 Apr 2026 the cap applies to the base expense ratio: the management fee, running costs and distributor commission. GST, other taxes and brokerage are added on top.
An active equity fund may charge up to 2.10% on its first ₹500 crore, 1.90% on the next ₹250 crore and 1.60% on the next ₹1,250 crore. The cap keeps falling as the fund grows, down to 0.95%.
Debt and other active funds start at 1.85%. Index funds and ETFs are capped at 0.90%. The old extra 5 basis points and the B-30 allowance are gone.
A direct plan pays no commission, so it costs less, and no expense in it may be higher than in the regular plan. Fund houses publish every scheme’s TER daily.
Key idea: Comparing the regular and direct expense ratio of the same scheme shows the most a distributor can be earning on it.
Try the short quiz on this page to check what stuck.
No. From 1 Apr 2026 the cap is on the base expense ratio; GST and other statutory levies are added on top.
At least 3 working days, except changes caused by the fund’s size moving between slabs.
The 2026 Regulations allow one only as SEBI specifies, and no framework had been issued by 13 Nov 2026.
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